Will The Reverse Mortgage Ceiling Increase by More Than $270,000?
January 25th, 2008
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It may happen in the next few weeks that the size of FHA-insured reverse mortgages could increase to more than $635,000. That’s a huge jump from today’s maximum size of $362,790.
The Congress is now considering an economic stimulus package to help the country avoid a recession or, at least, a bigger recession. Whether such a package will actually do much good is an open question. What is not a question is that the country now expects some sort of legislation, no matter how useful or useless, to result in checks from Uncle Sam to most households.
Rumor has it that the House measure would raise the conventional loan limit to as much as $730,000 in high-cost areas. You say this has nothing to do with fighting a recession? That would be both correct and irrelevant with regard to way things work in Washington.
If the conventional loan limit is increased to $730,000, and if the FHA loan limit remains 87 percent of the conventional benchmark, then FHA loans for as much as $635,100 would be available — a huge jump from the current cap of $362,790.
Since an estimated 90 percent of all reverse mortgages are insured by the FHA, it follows that an increase in the FHA loan limit would also apply to reverse mortgages.
Is this stuff real? Will it happen?
Proposed legislation is always bouncing around Capitol Hill. Raising the conventional loan limit within the stimulus package would be a way to obtain one of the goals of “FHA Modernization” without actually passing such a bill. That said, the Senate is believed to be against an increase in the conventional loan ceiling, the regulator who oversees Fannie Mae and Freddie Mac is opposed and a lot of “proposed legislation” can fall out of a bill once a final measure comes out of a congressional conference committee.
Stay tuned — this could be interesting.
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January 26th, 2008 at 10:14 am
There are areas where values have legitimately increased to the 400-500 thousand range – especially seniors who bought homes in these areas decades ago. If they refinanced any time in the last 10 years, they may have a mortgage balance that cannot be paid off by the percentange of $362,720(or $275,200 in the case of Chicagoland)to which their age entitles them. An increase in the limit will allow a greater number of seniors to effectively utilize this program instead of facing foreclosure.
March 19th, 2008 at 6:49 pm
Has there been any movement on the possible increase of FHA insured Reverse Mortgages in Alabama from the current $200k. This needs to be done.
June 3rd, 2008 at 5:18 pm
IF THE AIM OF REVERSE MORTGAGES IS TO HELP SENIORS TO STAY IN THEIR HOMES THEN THE REVERSE MORTGAGE CEILING SHOULD BE INCREASED TO $730,000.
MANY SENIORS ARE STRUGGLING TO PAY THEIR MORTGAGE. THEY HAVE MORTGAGES THAT THEY WILL NEVER BE ABLE TO PAY OFF.
FOOD PRICES ARE RISING AND WILL CONTINUE TO RISE AS WE MOVE CLOSER AND CLOSER TO A GREEN ECONOMY…AS AN EXAMPLE: ETHENOL MADE FROM CORN WILL RAISE THE PRICE OF CORN, BEEF, PORK AND FOWL… GASOLINE PRICES ARE NOW OVER $4.50/GALLON AND WILL GO HIGHER AS CHINA AND INDIA INCREASE THEIR USE OF PETROLEUM PRODUCTS AND WE DO NOT ALLOW DRILLING OFF OUR COASTLINES.
THEIR ARE TOO MANY SENIORS NOT ABLE TO AFFORD MEDICAL CARE AND WHO ARE EATING CAT FOOD. ALLOWING SENIORS TO TAKE MORE MONEY OUT OF THEIR HOME CAN MEAN THE DIFFERENCE, LITERLY, BETWEEN LIFE AND DEATH. WE CAN AFFORD A WAR COSTING THOUSAND OF LIVES AND BILLIONS OF DOLLARS BY WE CAN NOT AFFORD TO TAKE CARE OF OUR SENIORS CITIZENS. THEY HAVE PAID THEIR DUES, NOW ITS UP TO US TO PAY OURS.